Yes, you can pay Stamp Duty Land Tax (SDLT) when buying commercial property in England or Northern Ireland.
However, commercial property uses different tax bands from residential property, and there is normally no SDLT to pay on the first £150,000 of chargeable consideration.
For a straightforward freehold commercial purchase, the current non-residential SDLT rates are:
| Commercial property value | SDLT rate |
| Up to £150,000 | 0% |
| £150,001 to £250,000 | 2% |
| Above £250,000 | 5% |
The rates are progressive. This means the 5% rate does not apply to the entire purchase price once a property exceeds £250,000; it only applies to the portion above that threshold. These rates apply to qualifying non-residential and mixed-use property in England and Northern Ireland.
The calculation can become considerably more complicated where VAT is charged, several properties are bought from the same seller, a lease includes both a premium and rent, fixtures and equipment form part of the deal, or a company purchases a property containing residential accommodation.
What Counts as Commercial Property for Stamp Duty?
For SDLT purposes, non-residential property can include shops, offices, warehouses, industrial premises, agricultural land used commercially, forests and other land that does not form part of a dwelling.
A transaction containing both residential and genuinely non-residential elements can also qualify as mixed use. A common example would be a shop with residential accommodation above it.
HMRC also treats a transaction involving six or more separate dwellings bought in a single transaction as non-residential for SDLT purposes.
Anyone considering financing premises should also look at how commercial mortgage options affect the overall acquisition cost, because SDLT is only one of several significant upfront expenses.
How Much Stamp Duty Do You Pay on Commercial Property?
Consider a business buying a freehold office for £550,000, assuming there is no additional VAT and no deductible chattel value.
The SDLT calculation is:
| Portion of price | Rate | SDLT |
| First £150,000 | 0% | £0 |
| Next £100,000 | 2% | £2,000 |
| Remaining £300,000 | 5% | £15,000 |
| Total | £17,000 |
So the buyer pays £17,000 in SDLT, not 5% of the full £550,000.
A commercial property bought for £225,000 would produce SDLT of £1,500, while a qualifying property costing £130,000 would normally produce no SDLT because the consideration remains below £150,000.
However, paying no tax does not necessarily mean there is no filing requirement. HMRC says a return is generally required where the price or value of the property is £40,000 or more, even where the resulting SDLT bill is zero.
Does VAT Increase Stamp Duty on Commercial Property?
This is one of the most easily overlooked costs in a commercial property transaction.
Commercial land and buildings are normally exempt from VAT, but a property owner can make an option to tax. Once an option applies, supplies of that interest in the property will normally become standard-rated for VAT purposes.
More importantly for the buyer, SDLT is calculated on chargeable consideration including any VAT payable.
Suppose a commercial property is agreed at:
Purchase price: £500,000
VAT at 20%: £100,000
SDLT consideration: £600,000
The SDLT becomes:
| Band | Calculation | SDLT |
| £0–£150,000 | 0% | £0 |
| £150,001–£250,000 | £100,000 × 2% | £2,000 |
| £250,001–£600,000 | £350,000 × 5% | £17,500 |
| Total SDLT | £19,500 |
If no VAT had been chargeable and SDLT had instead been calculated on £500,000, the liability would have been £14,500.
The VAT therefore creates an additional £5,000 SDLT cost in this example, on top of the £100,000 VAT itself.
That is why buyers should establish the seller’s VAT and option-to-tax position before agreeing the final funding requirement.
There are exceptions. For example, a property investment sale may sometimes qualify as a transfer of a business as a going concern (TOGC) if the relevant conditions are satisfied. In qualifying circumstances, VAT treatment can therefore differ significantly.
Can Fixtures and Fittings Reduce Commercial Property SDLT?
Potentially, but this area needs to be approached carefully.
SDLT applies to land and items legally forming part of that land. Genuine moveable assets, or chattels, can fall outside the SDLT calculation where the purchase price is apportioned between the property and those assets on a just and reasonable basis.
HMRC gives examples such as free-standing furniture and certain removable equipment. By contrast, assets that are attached to the property and form part of the building are normally included in the chargeable consideration.
For commercial premises this distinction can matter where the acquisition includes machinery, restaurant equipment, office furniture or other business assets.
For example, assume a £500,000 transaction genuinely includes £25,000 of separately valued moveable chattels.
If £475,000 is properly attributable to the land and building, SDLT on that amount would be:
£2,000 + £11,250 = £13,250
Without the legitimate £25,000 apportionment, SDLT on £500,000 would be £14,500.
That is a potential £1,250 difference.
However, buyers cannot simply assign an arbitrary value to furniture or equipment to reduce SDLT. HMRC says the allocation should reflect open-market value, depreciation and the condition of the assets, with contemporaneous evidence supporting the valuation. HMRC can investigate an apportionment it considers unreasonable.
What Happens if You Buy Several Commercial Properties From the Same Seller?
Separate purchases are not always treated separately for SDLT.
Transactions may be linked where there is more than one transaction between the same buyer and seller, or connected persons, and the transactions form part of the same arrangement, scheme or series.
When transactions are linked, HMRC generally uses the combined chargeable consideration to determine the applicable SDLT bands.
Consider two commercial units purchased from the same seller as part of one arrangement:
| Property | Price |
| Unit A | £140,000 |
| Unit B | £140,000 |
| Combined consideration | £280,000 |
If looked at individually, each property sits below £150,000.
But if they are linked, the SDLT calculation is based on £280,000:
£0 on the first £150,000
£2,000 on the next £100,000
£1,500 on the remaining £30,000
Total SDLT: £3,500
That liability is then normally apportioned between the linked transactions.
This rule is particularly important when buying several shops, offices, industrial units or properties in a portfolio from one owner.
Do You Pay Stamp Duty on a Commercial Lease?
Commercial leases can generate SDLT in two different ways.
For a new non-residential lease, HMRC may charge SDLT on both the lease premium and the net present value of the rent, with the two calculations carried out separately and then added together.
The premium uses the normal commercial property bands:
| Lease premium | SDLT |
| Up to £150,000 | 0% |
| £150,001–£250,000 | 2% |
| Above £250,000 | 5% |
Rent is calculated using its net present value, or NPV:
| NPV of rent | SDLT |
| Up to £150,000 | 0% |
| £150,001–£5 million | 1% |
| Above £5 million | 2% |
Worked Commercial Lease Example
Assume a business takes a new commercial lease where:
Premium: £300,000
HMRC-calculated NPV of rent: £650,000
SDLT on the premium is:
£0 on £150,000
£2,000 on the next £100,000
£2,500 on the remaining £50,000
Premium SDLT = £4,500
The rental NPV calculation is:
£0 on the first £150,000
1% on the remaining £500,000
Rent SDLT = £5,000
Therefore:
Total SDLT = £9,500
VAT payable on rent must also be included when calculating the NPV.
An existing lease that is being assigned is different. In a straightforward assignment, SDLT is generally calculated on the consideration paid to acquire the existing lease rather than recalculating SDLT on all future rent.
Businesses negotiating their occupation terms may also need to consider the wider rules surrounding commercial lease renewals, particularly where the Landlord and Tenant Act 1954 applies.
Does It Matter Whether an Individual, Company or Partnership Buys the Property?
For a straightforward purchase of purely commercial property, the basic non-residential SDLT bands do not become higher simply because the buyer is a limited company or SPV.
This is an important distinction from residential investment property.
A company buying a normal shop, warehouse or office does not automatically pay the residential 5% additional-property surcharge merely because it is a company. This differs from the rules applying to stamp duty on a second home or additional residential property.
Partnerships can be more complicated. Special SDLT rules can apply when property is transferred into or out of a partnership, or where interests in a property investment partnership change hands.
In some cases, chargeable consideration is calculated by reference to market value and the economic interest transferred rather than simply the cash paid.
Companies also need extra care with mixed-use purchases containing an expensive dwelling.
HMRC’s Schedule 4A rules can, in certain circumstances, impose the 17% corporate residential rate on a residential component worth more than £500,000, while the remaining commercial element is treated separately. Relevant business exemptions can change the result.
Therefore, “companies always pay commercial rates on mixed-use property” is not a safe assumption.
Is There a Non-UK Resident Stamp Duty Surcharge on Commercial Property?
Not on a genuine non-residential purchase.
The 2% non-UK resident SDLT surcharge applies to qualifying residential transactions. HMRC specifically confirms that the surcharge does not apply to non-residential property and ordinarily does not apply to mixed transactions.
A foreign investor buying a genuine £1 million commercial warehouse therefore does not simply add another 2% because the investor is non-UK resident.
That is different from purchasing residential property in England or Northern Ireland.
Can a Residential Property Simply Be Called Mixed Use to Pay Less SDLT?
No.
Mixed-use treatment can result in substantially lower SDLT on high-value transactions, but the property must genuinely contain non-residential land or buildings for SDLT purposes.
A large garden, paddock, garage, annex or piece of adjoining land does not automatically convert an otherwise residential acquisition into a mixed-use transaction.
HMRC looks at what the property actually consists of and how the relevant land relates to the dwelling at the effective transaction date.
This remains an active area of litigation.
In HMRC v Suterwalla [2024] UKUT 188 (TCC), the dispute concerned whether a paddock associated with a residential property supported mixed-use treatment.
Other tribunal disputes have reached different conclusions on apparently similar facts. In a 2026 case involving a let paddock, the tribunal concluded that the paddock remained part of the residential property’s grounds.
The lesson is that mixed-use SDLT is highly fact-sensitive. A grazing agreement, separate title number or commercial description alone does not guarantee commercial rates.
How Long Do You Have to File and Pay Commercial Property SDLT?
An SDLT return and any tax due normally have to reach HMRC within 14 days of the effective date of the transaction.
The effective date is usually completion, although substantial performance can sometimes trigger the deadline earlier.
Where a solicitor, conveyancer or agent represents the purchaser, that representative can normally file electronically.
A buyer who is not represented by a solicitor, agent or legal conveyancer generally has to use the paper SDLT1 process. Certain complicated commercial transactions can also require supplementary forms.
Late filing can result in an automatic penalty of £100 where the return is up to three months late and £200 after three months. Returns more than 12 months late can also attract a tax-based penalty of up to the amount of tax due. Late SDLT payments accrue interest.
Can You Amend an SDLT Return or Claim a Refund?
Yes.
HMRC currently allows an SDLT return to be amended for 12 months from its filing date.
A refund might arise because the buyer used the wrong property classification, incorrectly calculated the consideration, failed to claim an available relief or simply paid more than the amount shown on the return.
If the buyer is within one year of the filing date, the refund can normally be pursued by amending the return.
There is also an important longer window that many buyers overlook. HMRC says overpayment relief may be claimed where more than one year has passed since the filing date, provided no more than four years have passed since the effective date of the transaction, subject to the applicable conditions and evidence.
A refund payment itself does not necessarily mean HMRC has accepted the underlying tax position. HMRC states that it can subsequently carry out a compliance check into an amended return or repayment claim.
How Does Commercial Property Stamp Duty Differ in Scotland and Wales?
“Stamp duty” is often used as a general term, but SDLT only operates in England and Northern Ireland.
Scotland uses Land and Buildings Transaction Tax (LBTT), while Wales uses Land Transaction Tax (LTT).
For non-residential purchases, the current comparison is:
| Purchase-price portion | England & Northern Ireland SDLT | Scotland LBTT | Wales LTT |
| Up to £150,000 | 0% | 0% | 0% |
| £150,001–£225,000 | 2% | 1% | 0% |
| £225,001–£250,000 | 2% | 1% | 1% |
| £250,001–£1m | 5% | 5% | 5% |
| Above £1m | 5% | 5% | 6% |
Revenue Scotland currently applies 0% up to £150,000, 1% between £150,000 and £250,000 and 5% thereafter.
The Welsh Revenue Authority applies 0% up to £225,000, 1% between £225,000 and £250,000, 5% from £250,000 to £1 million and 6% above £1 million.
Commercial leases also have separate rental calculations under each system, so buyers should not simply apply the English SDLT lease formula to premises in Scotland or Wales.
What Would SDLT Look Like on Commercial Properties in Bristol, Exeter and Bath?
Commercial listings provide a useful illustration of how the bands operate in practice.
At the time of checking in September 2026, Rightmove listed office accommodation at Eclipse Office Park in Bristol at £550,000, a shop on Wardrew Road in Exeter at £130,000, and office/studio premises at The Foundry in Bath at £365,000. These are asking prices rather than completed transaction values.
Assuming each purchase completed at the stated price, involved genuine non-residential property and no VAT was added, the indicative SDLT would be:
| Example | Assumed price | Indicative SDLT |
| Bristol office | £550,000 | £17,000 |
| Exeter shop | £130,000 | £0 |
| Bath office | £365,000 | £7,750 |
These examples also demonstrate why the VAT position must be checked separately. If a seller has opted to tax a property and VAT is added to the consideration, the resulting SDLT can be materially higher.
Common Commercial Stamp Duty Myths
| Claim | Correct position |
| “Commercial property under £150,000 requires no action.” | SDLT may be £0, but a return is commonly still required from £40,000. |
| “Companies always pay higher stamp duty.” | Not on a straightforward purely commercial purchase. |
| “Foreign buyers automatically pay another 2%.” | The non-resident surcharge is principally a residential-property rule. |
| “Furniture can always be deducted from the price.” | Only genuine non-land assets supported by a just and reasonable valuation can be excluded. |
| “Buying units separately avoids the higher bands.” | Linked-transaction rules can aggregate the purchases. |
| “Any paddock or large garden makes a property mixed use.” | Classification depends on the facts and the property’s legal character. |
| “Multiple Dwellings Relief can reduce a commercial deal.” | MDR was abolished for transactions completing from 1 June 2024, subject to transitional rules. |
Commercial Property SDLT Calculator Formula
For a straightforward freehold commercial property in England or Northern Ireland, first establish the chargeable consideration.
That normally means the purchase price, plus VAT where payable, less only any amount properly attributable to genuine non-chargeable assets.
The basic formula is then:
£0–£150,000: 0%
£150,001–£250,000: 2%
Anything above £250,000: 5%
For leases, linked transactions, mixed-use acquisitions, partnership reorganisations or corporate purchases involving residential elements, a simple purchase-price calculator may not produce the correct liability.
Do You Pay Stamp Duty on Commercial Property? Final Answer
Yes. Commercial property can attract Stamp Duty Land Tax in England and Northern Ireland once the chargeable consideration exceeds £150,000.
The standard commercial rates are 0% on the first £150,000, 2% on the portion between £150,000 and £250,000 and 5% above £250,000.
The headline bands are relatively simple. The difficult part is establishing what amount those bands should apply to.
VAT can increase the taxable consideration, linked transactions can combine several apparently small purchases, genuine chattels can sometimes be excluded, and commercial leases may create separate charges on their premium and rental NPV.
Companies and overseas buyers should also avoid assuming that the residential property surcharges automatically carry across to genuine commercial premises.
For substantial transactions, the SDLT analysis should therefore be completed alongside the legal and VAT due diligence rather than calculated only after the commercial terms have been agreed.
Frequently Asked Questions
Do you pay stamp duty on commercial property under £150,000?
Normally there is no SDLT to pay on a straightforward non-residential purchase where the chargeable consideration does not exceed £150,000. A return may still be required, particularly where the consideration is £40,000 or more.
Do limited companies pay more stamp duty on commercial property?
Not simply because the buyer is a company. A straightforward purchase of purely commercial property normally uses the standard non-residential rates. Special rules can arise where residential property is included.
Is VAT included when calculating commercial property stamp duty?
Yes. Where VAT is payable on the transaction, HMRC includes that VAT in the chargeable consideration for SDLT.
Do you pay stamp duty when renting a commercial property?
A new commercial lease can attract SDLT on its premium and on the net present value of the rent. The two amounts are calculated separately before being combined.
Do non-UK residents pay extra SDLT on commercial property?
The 2% non-resident surcharge does not normally apply to genuine non-residential property.
Can furniture and equipment reduce commercial SDLT?
Genuine moveable chattels can potentially be excluded where there is a just and reasonable market-value apportionment supported by evidence. Fixtures forming part of the property normally remain chargeable.
Can several commercial properties each qualify for the £150,000 nil-rate band?
Not necessarily. If the acquisitions are linked, HMRC can aggregate the consideration before applying the SDLT bands.
How quickly must commercial property SDLT be paid?
The SDLT return and payment are normally due within 14 days of the effective transaction date, which is usually completion.
Can commercial property SDLT be reclaimed?
Yes, in appropriate circumstances. An SDLT return can generally be amended within 12 months of its filing date. Overpayment relief may also be available for qualifying claims made within four years of the transaction’s effective date.
